Six years ago, the New Jersey Legislature relented and joined most states in allowing residents to have wine shipped to their homes. But unlike most other states, there was a catch: Jerseyans could only get delivery of wine from small wineries.
Lawmakers and a coalition led by California wineries are working to change that, with bipartisan legislation that would allow direct shipments of wines from vineyards of all sizes to the state. This could make it easier for New Jerseyans to buy some hard-to-find wines and bring an additional $4 million to the state’s coffers in fees and taxes.
“For the most part, these wine purchases are driven by tourism. They are simply not available locally,” said Jeremy Benson, spokesman for the Free the Grapes coalition of wineries, consumers and retailers pushing to change the state law. “Our goal is to engage consumers who are frustrated over this.”
New Jersey’s current cap on the size of wineries allowed to ship directly to consumers in the Garden State — those producing 250,000 gallons, or about 106,000 cases — makes it an outlier. Of the 44 states that allow direct shipment of wine, only New Jersey and Ohio have this kind of cap. Arizona and Massachusetts eliminated similar restrictions last year. With Oklahoma set to begin allowing direct wine shipment in October, the only states that do not permit any kind of home delivery of wines will be Alabama, Delaware, Kentucky, Mississippi and Utah.
The difference may not matter to most New Jerseyans, who can get reasonably priced wines in liquor stores around the state. But for oenophiles, it may be impossible to have delicious wines tasted on a trip to California or upstate New York shipped home.
Current law limits choice
Benson said that about 90 percent of the wines produced by the nation’s estimated 10,000 wineries are unavailable for shipping due to the law, which also affects small, family-owned wineries that have been purchased by larger ones but retain their own label. For instance, he said, Patz and Hall is a popular Sonoma Valley winery with a wine club that lost customers in New Jersey when it was purchased by a large Washington state winery.
“They have a number of special smaller products they would sell exclusively in the tasting room or to the wine club, but you have to be a wine club member to get it,” Benson said. “They had to send a letter to club members say, ‘Sorry.’”
Identical bills are pending in both the Senate and Assembly (S-2496/A-3867) to allow wineries producing more than the current cap to ship up to 12 cases a year to people age 21 and older. As under current law, the wine has to be for personal consumption and cannot be resold. Both bills have bipartisan sponsorship.
“In general, I support legislation that updates and modernizes our antiquated liquor laws,” said Assemblyman Andrew Zwicker (D-Middlesex), a co-sponsor of the Assembly version of the bill. “As New Jersey’s wine industry has grown, this cap has the potential to have a negative impact on New Jersey’s wineries as they grow.”
Already strongly opposed is the New Jersey Liquor Store Alliance, which issued a letter shortly after the first bill was introduced two months ago. Its highly critical letter contends that the 2012 direct-shipping law has not delivered promised revenues for the state and that the current legislation is unnecessary if its intent is to give oenophiles access to all wines from large vineyards.
“The bottom-line of this second-generation legislation is that we cannot find a single winery in this country (that) produces over 250,000 gallons that is not already selling their wines in our State through our exemplary three-tier system that guarantees 100% tax compliance at every level in our tightly regulated state-based industry,” the letter states. “We would like to know who are those wineries producing over 250,000 gallons that FREE THE GRAPES claims to be representing? Our concern is that they are some of the same wineries whose products are already readily available among the more than 50,000 products currently registered in our state.”
Benson said that because of the large number of wineries across the country, “it’s not logistically possible for any state wholesaler or retailer to carry them all.”
Free the Grapes also contends that is not the intention — and has not been the experience in other winery-shipping states — to hurt wholesalers or retailers. For one thing, it would be impractical for a person to have shipped a wine widely available in stores both because it would take longer to receive, and it would cost more due to shipping fees. Benson cites a study done in Maryland a year after its direct-shipping law took effect that found “minimal to no impact on Maryland wholesalers.” In fact, the total amount of wine delivered by wholesalers increased by close to 4 percent the year direct shipping became legal.
The liquor store alliance pointed to the same study to show how little impact direct shipping has on state revenues. It generated less than $600,000 in Maryland in its first year. The report addressed that, stating, “Though the increases in volume and tax revenues are nominal, there is a measurable positive impact on product availability and consumer choice.”
Extra revenue without the cap?
A study by the Eagleton Center for Public Interest Polling at Rutgers University found that New Jersey could gain about $4 million in additional revenues if the winery cap were repealed. That’s more than double the $3.3 million the state received as a result of wine shipments in 2016.
The NJLSA, which did not return a request for comment, contends in its letter that the sale of wines via the internet has declined since the 2012 passage of the direct-shipment law. The group also suggests it will cost more for enthusiasts to buy wine if the cap is lifted and all wineries can ship to consumers.
“Ironically, since the passage of the last Winery-to-Consumer direct shipping legislation our once robust off-premise internet retail sector has been seriously downsized and is stagnating,” the letter states. “Post passage has led to scores of sought after allocated wines are no longer even available in stores as they are only sold via the internet from out-of-state wineries at significantly higher prices to consumers!”
Benson did not deny that it is more expensive to buy wines through the mail but said if consumers are willing to pay more to get their favorites, they should be able to do so.
Last year, just 369 wineries paid the $938 fee to allow them to ship to New Jersey. That’s about two thirds less than Pennsylvania and just 18 percent of the close to 2,100 shipping to New Yorkers. And that’s despite the fact that New Jersey ranks fifth in the nation in wine consumption per capita, according to Benson.
“New Jersey is underdeveloped by direct shipment standards,” he said.
Benson also disputed the NJLSA contention that the bill would hurt the state’s more than 50 wineries. He said they can already ship within state and to other states and that people who have fallen for any of the state’s varieties are not likely to give up on them because they can get others delivered.
Zwicker said the bill would help in-state wineries as they grow. But for him, the bottom line is, “It really should be the New Jersey consumer that has the ability to choose which wine to purchase.”